BURNHAM HOLDINGS, INC. ANNOUNCES YEAR 2021 FINANCIAL RESULTS AND EXECUTIVE LEADERSHIP RETIREMENT

Rhea-AI Summary

Burnham Holdings, Inc. (OTC-Pink: BURCA) reported financial results for the year ended December 31, 2021. Net sales reached $218.5 million, a 16.5% increase from 2020, driven by improved winter weather and recovering demand post-COVID-19. However, gross profit declined to $35.0 million, a 9.1% drop, largely due to rising material costs. Net income fell 85% to $1.0 million. The company declared a quarterly dividend of $0.22 per share, payable on March 11, 2022. The annual meeting is scheduled for April 25, 2022.

Positive

• Net sales increased by 16.5% to $218.5 million in 2021.
• Cash flow from operations exceeded $10.5 million, reflecting over 100% growth from 2020.
• Residential heating product sales increased by 22.3% compared to 2020.

Negative

• Net income declined by 85% to $1.0 million due to material inflation and last-in, first-out inventory adjustments.
• Gross profit decreased to $35.0 million, down 9.1% from 2020, affecting overall profitability.
• Commercial product sales remained flat due to slow market recovery.

LANCASTER, Pa., Feb. 17, 2022 /PRNewswire/ -- Burnham Holdings, Inc., (OTC-Pink: BURCA), the parent company of multiple subsidiaries that are leading domestic manufacturers and sellers of boilers, and related HVAC products and accessories (including furnaces, radiators, and air conditioning systems), for residential, commercial and industrial applications, today reported financial results for the year ended December 31, 2021.

The following are some key highlights of our 2021 financial results:

• Net sales were $ 218.5 million, an increase of $ 31.0 million, or 16.5%, compared to 2020. Sales increased in 2021 due to more normal winter weather compared to 2020 along with improved economic conditions, as residential heating equipment demand recovered from the COVID-19 impacts that hurt sales volume in the first half of 2020. Sales of commercial boiler products were basically flat in 2021 as overall demand for commercial equipment continued to be depressed as the result of COVID-19.
• Gross profit was $ 35.0 million, a decline of $ 3.5 million, or 9.1%, versus 2020, mainly due to significant increases in purchased material prices throughout 2021.
• Net income of $ 1.0 million was down by $ 5.5 million (85%) compared to 2020 net income of $6.5 million.  Last-in, first-out inventory adjustments caused an estimated $7.0 million negative impact to net income in 2021.
• Cash flow from operations was $10.5mm, up over 100% versus 2020.

Further details of the results mentioned in this press release will be discussed in the Company's 2021 Annual Report and audited financial statements, which will be available on or around March 21, 2022.

Burnham Holdings, Inc. net sales of $218.5mm for 2021 were influenced by a number of factors, as all of our markets and businesses continued to recover from COVID-19 pandemic-related business shutdown. Sales of residential heating products in 2021 increased by 22.3% compared to 2020, as our key market areas rebounded significantly from the 2020 COVID-19 slowdown.  Sales of commercial products in 2021 were basically flat compared to last year, as markets for large commercial boilers have recovered at a slower pace from the impacts of COVID-19.  Commercial product order backlogs continued to build throughout the second half the year, however, and were a combined 35% higher at year-end compared to 2020.

Gross profit (profit after deducting cost of goods sold (COGS) from net sales) in 2021 was $ 35.0 million, or 16.0% of net sales. This compares to gross profit of $ 38.5 million in 2020, which represented 20.5% of net sales.  Reported net income in 2021 was $1.02 million, a return on net sales of 0.5%, and basic earnings per share of $0.22. This compared to reported 2020 net income of $6.55 million, a return on net sales of 3.5%, and basic earnings per share of $ 1.43.

Profitability was negatively impacted by significant difficulties in hiring and retaining qualified employees, and multiple supply chain issues resulting in numerous shortages of critical materials, which negatively impacted production capacity and efficiencies, particularly at Casting Solutions, our gray iron foundry which supplies critical parts to our cast iron boiler businesses.  Purchased material price inflation that began in the fourth quarter of 2020, continued unabated through 2021. Each of our subsidiaries implemented multiple price increases throughout the year to recover these increased costs and maintain profitability.  Because most of our inventory is reported on a last-in, first-out (LIFO) basis, however, our reported net income was negatively impacted by the unprecedented material inflation we experienced throughout the year.  On a pro-forma basis, reported gross profit as a percentage of sales would have been      4.2 percentage points higher (comparable to 2020) if we reported inventory on a first-in, first-out (current cost) basis.   

We are pleased to announce that Nicholas I. Ribich has been appointed Vice President, Chief Financial Officer and Secretary of the Company, effective April 1, 2022.  Mr. Ribich joined the Company after serving in a number of financial management positions with Harley-Davidson, Johnson Controls and Arthur Andersen, LLP.  He holds a BBA from the University of Wisconsin-Milwaukee and is a Certified Public Accountant. He will replace Dale R. Bowman, who is retiring after a distinguished 26 year career with the Company, during which he held numerous senior leadership positions throughout our organization. We wish Dale the best of luck in his retirement, and thank him for his many valuable contributions to the Company.

At its meeting on February 17, 2022, Burnham Holdings, Inc.'s Board of Directors declared a quarterly common stock dividend of $0.22 per share, payable on March 11, 2022 with a record date of March 4, 2022; and has scheduled the 2022 Annual Meeting of Shareholders for Monday, April 25th with a shareholder record date of March 1, 2022.  The meeting will be held at the Penn Square Marriott in Lancaster, Pennsylvania beginning at 11:30 A.M.  Further details regarding the meeting will be provided in March, 2022 on our website, burnhamholdings.com.

Consolidated Statements of Income
(In thousands, except per share data)				Years Ended December
(Data is unaudited (see Notes))				2021		2020
Net sales				$       218,508		$       187,461
Cost of goods sold				183,486		148,985
		Gross profit		35,022		38,476
Selling, general and administrative expenses				33,891		30,477
		Operating income		1,131		7,999
Other income (expense):
	Non-service related pension credit			574		684
	Interest and investment income			596		719
	Interest expense			(1,049)		(930)
		Other income (expense)		121		473
Income before income taxes				1,252		8,472
Income tax (benefit) expense				229		1,925
	NET (LOSS) INCOME			$           1,023		$           6,547
	BASIC (LOSS) EARNINGS PER SHARE (Note 1)			$             0.22		$             1.43
	DILUTED (LOSS) EARNINGS PER SHARE (Note 1)			$             0.22		$             1.43
	COMMON STOCK DIVIDENDS PAID			$             0.88		$             0.88
	BOOK VALUE PER COMMON SHARE			$           20.68		$           19.89
Consolidated Balance Sheets
(in thousands and data is unaudited (see Notes))				December
		ASSETS		2021		2020
CURRENT ASSETS
	Cash, cash equivalents and restricted cash			$           5,654		$           5,759
	Trade accounts receivable, less allowances			24,920		28,654
	Inventories			51,066		49,203
	Prepaid expenses and other current assets			4,717		2,154
		TOTAL CURRENT ASSETS		86,357		85,770
PROPERTY, PLANT AND EQUIPMENT, net				57,496		52,494
OPERATING LEASE RIGHT OF USE ASSETS (Note 7)				2,065		4,022
OTHER ASSETS, net				21,551		12,089
		TOTAL ASSETS		$       167,469		$       154,375
		LIABILITIES AND STOCKHOLDERS' EQUITY		2021		2020
CURRENT LIABILITIES
	Accounts and taxes payable & accrued expenses			$         33,429		$         27,382
	Current portion of long-term liabilities			152		147
	Current portion of operating lease liabilities (Note 7)			765		1,020
		TOTAL CURRENT LIABILITIES		34,346		28,549
LONG-TERM DEBT				21,843		19,292
LONG-TERM OPERATING LEASE LIABILITIES (Note 7)				1,300		3,002
OTHER POSTRETIREMENT LIABILITIES (Notes 5 and 6)				6,062		5,742
DEFERRED INCOME TAXES (Note 5)				8,753		6,575
STOCKHOLDERS' EQUITY
	Preferred Stock			530		530
	Class A Common Stock			3,615		3,560
	Class B Convertible Common Stock			1,329		1,384
	Additional paid-in capital			16,317		16,115
	Retained earnings			113,582		116,633
	Accumulated other comprehensive income (loss) (Note 5)			(22,260)		(29,043)
	Treasury stock, at cost			(17,948)		(17,964)
		TOTAL STOCKHOLDERS' EQUITY		95,165		91,215
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$       167,469		$       154,375

 

Consolidated Statements of Cash Flows			Years Ended December 31,
(in thousands and data is unaudited (see Notes))			2021		2020
	Net income		$    1,023		$    6,547
	Depreciation and amortization		4,543		4,336
	Pension and postretirement liabilities expense		93		91
	Contributions to pension trust (Note 6)		(500)		(960)
	Other net adjustments		10,454		1,407
	Changes in operating assets and liabilities		(5,085)		(6,681)
NET CASH PROVIDED BY OPERATING ACTIVITIES			10,528		4,740
	Net cash used in the purchase of assets		(10,338)		(4,607)
	Proceeds from borrowings		3,561		3,840
	Proceeds from stock option exercise and Treasury activity, net		218		90
	Dividends paid		(4,074)		(4,053)
(DECREASE) INCREASE IN CASH, CASH  EQUIVALENTS AND RESTRICTED CASH			(105)		10
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR			5,759		5,749
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR			$    5,654		$    5,759

 

Consolidated Statements of Stockholders' Equity
(in thousands and data is unaudited (see Notes))
Year ended December 31, 2021
				Class B			Accumulated
			Class A	Convertible	Additional		Other	Treasury
		Preferred	Common	Common	Paid-in	Retained	Comprehensive	Stock,	Stockholders'
		Stock	Stock	Stock	Capital	Earnings	Income (Loss)	at Cost	Equity
Balance at January 1, 2021		$        530	$      3,560	$      1,384	$    16,115	$  116,633	$           (29,043)	$   (17,964)	$         91,215
Exercise of stock options		-	-	-	202	-	-	16	218
Conversion of common stock		-	55	(55)	-	-	-	-	-
Cash dividends declared:
	Preferred stock - 6%	-	-	-	-	(18)	-	-	(18)
	Common stock - ($0.88 per share)					(4,056)			(4,056)
Net income for the period		-	-	-	-	1,023	-	-	1,023
Other comprehensive income (loss),
net of $ (2,026) of tax		-	-	-	-	-	6,783	-	6,783
Balance at December 31, 2021		$        530	$      3,615	$      1,329	$    16,317	$  113,582	$           (22,260)	$   (17,948)	$         95,165
Year ended December 31, 2020
				Class B			Accumulated
			Class A	Convertible	Additional		Other	Treasury
		Preferred	Common	Common	Paid-in	Retained	Comprehensive	Stock,	Stockholders'
		Stock	Stock	Stock	Capital	Earnings	Income (Loss)	at Cost	Equity
Balance at January 1, 2020		$        530	$      3,536	$      1,408	$    16,034	$  114,139	$           (30,738)	$   (17,973)	$         86,936
Exercise of stock options		-	-	-	81	-	-	9	90
Conversion of common stock		-	24	(24)	-	-	-	-	-
Cash dividends declared:
	Preferred stock - 6%	-	-	-	-	(18)	-	-	(18)
	Common stock - ($0.88 per share)	-	-	-	-	(4,035)	-	-	(4,035)
Net income for the period		-	-	-	-	6,547	-	-	6,547
Other comprehensive income (loss),
net of $(507) of tax		-	-	-	-	-	1,695	-	1,695
Balance at December 31, 2020		$        530	$      3,560	$      1,384	$    16,115	$  116,633	$           (29,043)	$   (17,964)	$         91,215

 

Notes To Financial Statements:
	(1)	Basic earnings per share are based upon weighted average shares outstanding for the period.  Diluted earnings per share assume the conversion of outstanding rights into common stock.
	(2)	Common stock outstanding at December 31, 2021 includes 3,257,971 of Class A shares and 1,329,298 of Class B shares.
	(3)	Mark-to-Market adjustments are a result of changes (non-cash) in the fair value of interest rate agreements. These agreements are used to exchange the interest rate stream on variable rate debt for payments indexed to a fixed interest rate.  These non-operational, non-cash charges reverse themselves over the term of the agreements.
	(4)	Accounting rules require that the funded status of pension and other postretirement benefits be recognized as a non-cash asset or liability, as the case may be, on the balance sheet.  The resulting non-cash presentation on the balance sheet is reflected in "Deferred income taxes", "Other assets", "Other postretirement liabilities", and "Accumulated other comprehensive income (loss)", a non-cash sub-section of "Stockholders' equity" (See Note 10 of the 2021 Annual Report for more details).
	(5)	For the years 2021 and 2020, the Company made voluntary pre-tax contributions of $0.50 million and $0.96 million, respectively, to its defined benefit pension plan.  These payments increased the trust assets available for benefit payments (reducing "Other postretirement liabilities"), and did not impact the Statement of Income.
	(6)	Unaudited results, forward looking statements, and certain significant estimates and risks.  This note has been expanded to include items discussed in detail within the 2021 Annual Report.
		Unaudited Results and Forward Looking Statements. The accompanying unaudited financial statements contain all adjustments that are necessary for a fair presentation of results for such periods and are consistent with policies and procedures employed in the audited year-end financial statements.  These consolidated financial statements should be read in conjunction with the Annual Report for the period ended December 31, 2021.  Statements other than historical facts included or referenced in this Report are forward-looking statements subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those projected.  We undertake no duty to update or revise these forward-looking statements.
		Certain Significant Estimates and Risks.  Certain estimates are determined using historical information along with assumptions about future events.  Changes in assumptions for items such as warranties, pensions, medical cost trends, employment demographics and legal actions, as well as changes in actual experience, could cause these estimates to change.  Specific risks, such as those included below, are discussed in the Company's Quarterly and Annual Reports in order to provide regular knowledge of relevant matters.  Estimates and related reserves are more fully explained in the 2021 Annual Report.
		Retirement Plans:  The Company maintains a non-contributory defined benefit pension plan, covering both union and non-union employees, that has been closed to new hires for a number of years.  Benefit accrual ceased in 2009, or earlier depending on the employee group, with the exception of a limited, closed group of union production employees.  While not 100% frozen, these actions were taken to protect benefits for retirees and eligible employees, and have materially reduced the growth of the pension liability.  Lancaster Metal Manufacturing, a Company subsidiary, also contributes to a separate union-sponsored multiemployer defined benefit pension plan that covers its collective bargaining employees.  Variables such as future market conditions, investment returns, and employee experience could affect results.
		New Accounting Standard:
		During February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (ASC 842).  ASC 842 requires lessees to recognize the assets and liabilities that arise from all leases that exceed twelve months in duration on the balance sheet, regardless if they are operating or financing type leases.  A lessee shall recognize on the balance sheet a liability to make future lease payments (the lease liability) and a right-of-use asset representing the value of the right to use the asset for the remaining term of the lease agreement.  ASC 842 is effective for annual periods beginning after December 15, 2018, including interim periods.  The Company adopted ASC 842 effective January 1, 2019 using the optional transition method described in ASU No. 2018-11, 'Leases - Targeted Improvements', which was issued in July, 2018.  Under the optional transition method, the Company recognized any cumulative impact of initially applying ASC 842 as an adjustment to the opening balance of retained earnings as of January 1, 2019.
		The Company balance sheet at December 31, 2021 and December 31, 2020 includes total right-of-use asset values of $2,065 and $4,022, respectively; current liabilities of $(765) and $(1,020), respectively; and long-term liabilities of $(1,300) and $(3,002), respectively, related to future lease payments.  Leases at all of the Company's subsidiaries have been classified as operating leases.  Therefore, all lease payments made with respect to outstanding leases are reported as lease expense.  For the years ended December 31, 2021 and December 31, 2020, total lease expenses of $1,463 and $1,544, respectively, were included in the calculation of operating income.  Lease accounting details are explained in greater detail in the 2021 Annual Report.
		Medical Health Coverage: The Company and its subsidiaries are self-insured for most of the medical health insurance provided for its employees, limiting maximum exposure per occurrence by purchasing third-party stop-loss coverage.
		Retiree Health Benefits: The Company pays a fixed annual amount that assists a specific group of retirees in purchasing medical and/or prescription drug coverage from providers. Additionally, certain employees electing early retirement receive a fixed dollar amount based on years of employee service to assist them in covering medical costs.  These obligations are accounted for within the financial statements.
		Insurance: The Company and its subsidiaries maintain insurance to cover product liability, general liability, workers' compensation, and property damage. Well-known and reputable insurance carriers provide current coverage. All policies and corresponding deductible levels are reviewed on an annual basis. Third-party administrators, approved by the Company and the insurance carriers, handle claims and attempt to resolve them to the benefit of both the Company and its insurance carriers. The Company reviews claims periodically in conjunction with administrators and adjusts recorded reserves as required.
		General Litigation, including Asbestos: In the normal course of business, certain subsidiaries of the Company have been named, and may in the future be named, as defendants in various legal actions including claims related to property damage and/or personal injury allegedly arising from products of the Company's subsidiaries or their predecessors. A number of these claims allege personal injury arising from exposure to asbestos-containing material allegedly contained in certain boilers manufactured many years ago, or through the installation or removal of heating systems. The Company's subsidiaries, directly and/or through insurance providers, are vigorously defending all open asbestos cases, many of which involve multiple claimants and many defendants, which may not be resolved for several years. Asbestos litigation is a national issue with thousands of companies defending claims.  While the large majority of claims have historically been resolved prior to the completion of trial, from time to time some claims may be expected to proceed to a potentially substantial verdict against subsidiaries of the Company.  Any such verdict would be subject to a potential reduction or reversal of verdict on appeal, any set-off rights, and/or a reduction of liability following allocation of liability among various defendants.  For example, on July 23, 2013 and December 12, 2014, New York City State Court juries found numerous defendant companies, including a subsidiary of the Company, responsible for asbestos-related damages in cases involving multiple plaintiffs. The subsidiary, whose share of the verdicts amounted to $42 million and $6 million, respectively, before offsets, filed post-trial motions and appeals seeking to reduce and/or overturn the verdicts, and granting of new trials.  On February 9, 2015, the trial court significantly reduced the 2013 verdicts, reducing the subsidiary's liability from $42 million to less than $7 million.  Additionally, on May 15, 2015, the trial court reduced the subsidiary's liability in the 2014 verdict to less than $2 million.  On October 30, 2015, the subsidiary settled these verdicts for significantly less than the trial courts' reduced verdicts, with all such settled amounts being covered by applicable insurance.  The Company believes, based upon its understanding of its available insurance policies and discussions with legal counsel, that all pending legal actions and claims, including asbestos, should ultimately be resolved (whether through settlements or verdicts) within existing insurance limits and reserves, or for amounts not material to the Company's financial position or results of operations. However, the resolution of litigation generally entails significant uncertainties, and no assurance can be given as to the ultimate outcome of litigation or its impact on the Company and its subsidiaries. Furthermore, the Company cannot predict the extent to which new claims will be filed in the future, although the Company currently believes that the great preponderance of future asbestos claims will be covered by existing insurance. There can be no assurance that insurers will be financially able to satisfy all pending and future claims in accordance with the applicable insurance policies, or that any disputes regarding policy provisions will be resolved in favor of the Company.
		Litigation Expense, Settlements, and Defense: The 2021 charges for all uninsured litigation of every kind, were $1,227 thousand.  Expenses for legal counsel, consultants, etc., in defending these various actions and claims for the year were approximately $115 thousand.  Prior year's settlements and expenses, including amounts for self-insured asbestos cases, are disclosed in the 2021 Annual Report.
		Permitting Activities (excluding environmental): The Company's subsidiaries are engaged in various matters with respect to obtaining, amending or renewing permits required under various laws and associated regulations in order to operate each of its manufacturing facilities. Based on the information presently available, management believes it has all necessary permits and expects that all permit applications currently pending will be routinely handled and approved.
		Environmental Matters: The operations of the Company's subsidiaries are subject to a variety of Federal, State, and local environmental laws. Among other things, these laws require the Company's subsidiaries to obtain and comply with the terms of a number of Federal, State and local environmental regulations and permits, including permits governing air emissions, wastewater discharges, and waste disposal. The Company's subsidiaries periodically need to apply for new permits or to renew or amend existing permits in connection with ongoing or modified operations. In addition, the Company generally tracks and tries to anticipate any changes in environmental laws that might relate to its ongoing operations. The Company believes its subsidiaries are in material compliance with all environmental laws and permits.
		As with all manufacturing operations in the United States, the Company's subsidiaries can potentially be responsible for response actions at disposal areas containing waste materials from their operations. In the past five years, the Company has not received any notice that it or its subsidiaries might be responsible for remedial clean-up actions under government supervision. However, one issue covered by insurance policies remains open as of this date and is fully disclosed in the 2021 Annual Report. While it is not possible to be certain whether or how any new or old matters will proceed, the Company does not presently have reason to anticipate incurring material costs in connection with any matters.

 

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SOURCE Burnham Holdings, Inc.

FAQ

What were Burnham Holdings' net sales for 2021?

Burnham Holdings reported net sales of $218.5 million for the year ended December 31, 2021.

How did Burnham Holdings' net income change in 2021?

Net income for Burnham Holdings dropped by 85% to $1.0 million in 2021 compared to $6.5 million in 2020.

What is the dividend declared by Burnham Holdings in 2022?

Burnham Holdings declared a quarterly common stock dividend of $0.22 per share, payable on March 11, 2022.

When is the next annual meeting for Burnham Holdings?

The annual meeting of shareholders is scheduled for April 25, 2022.

What factors affected Burnham Holdings' profitability in 2021?

Profitability was impacted by rising material costs and challenges in hiring and retaining qualified employees.